Mar-12 Aug-12 Jan-13 Jun-13 Nov-13 Apr-14 Sep-14 Feb-15 Jul-15 Dec-15 May-16 Oct-16 Mar-17 Aug-17 2QFY2018 Result Update Pharmaceutical November 24, 2017 Dr. Reddy s Laboratories Performance Highlights Y/E March (` cr) 2QFY2018 1QFY2018 % chg (qoq) 2QFY2017 % chg (yoy) Net sales 3,546 3,316 6.9 3,586 (1.1) Gross profit 2,170 1,990 9.1 2,278 (4.7) Operating profit 649 306 112.3 579 12.1 Adj. net profit 285 59 382.1 295 (3.3) Dr Reddy s Labs (DRL) posted poor results for 2QFY2018, which were much lower than expectations. The sales came in at `3,546cr (`3,700cr expected) v/s. `3,586cr, a yoy de-growth of 1.1%. Global Generics at `2,862cr, posted a yoy de-growth of 1.0%, while PSAI at `119cr, registering a yoy de-growth of 2.0%. On operating front, the EBDITA came in at 18.3% (19.7% expected) v/s. 16.2% in 2QFY2017. R&D expenses were at 11.8% of sales in 2QFY2018 v/s. 14.5% of sales in 2QFY2017. Consequently, the PAT came in at `285cr (`594cr expected) v/s. `295cr in 2QFY2017, a yoy de-growth of 3.3%. We maintain our Reduce. A subdued quarter: The sales came in at `3,546cr (`3,700cr expected) v/s. `3,586cr, a yoy de-growth of 1.1%. Global Generics at `2,862cr, posted a yoy de-growth of 1.0%, while PSAI at `119cr, registered a yoy de-growth of 2.0%. The Global Generics, which forms 81% of overall sales, saw dip in its key growth market USA (`1,432cr), which posted a dip of 11.0% yoy, while Indian sales at `637cr posted a growth of 2.0%. The USA market continued to reel under the pricing pressures, while Indian sales were under the pressure on the back of GST. On operating front, the EBDITA came in at 18.3% (19.7% expected) v/s. 16.2% in 2QFY2017. R&D expenses were at 11.8% of sales in 2QFY2018 v/s. 14.5% of sales in 2QFY2017. Consequently, the PAT came in at `285cr (`594cr expected) v/s. `295cr in 2QFY2017, a yoy de-growth of 3.3%. Outlook & Valuation: We expect net sales to grow at a CAGR of 5.1% to `15,548cr and adjusted EPS to post a CAGR of 18.5% to end the period at `102 in FY2019E. We recommend a Reduce. Key financials (IFRS Consolidated) Y/E March (` cr) FY2016 FY2017 FY2018E FY2019E Net sales 15,471 14,081 13,734 15,548 % chg 4.4 (9.0) (2.5) 13.2 Net profit 2,001 1,204 1,158 1,691 % chg (9.8) (39.8) (3.8) 46.0 Adj net profit 2,357 1,204 1,158 1,691 % chg 6.3 (48.9) (3.8) 46.0 Adj. EPS (`) 138.2 72.6 69.9 102.0 EBITDA margin (%) 24.6 16.1 17.7 20.2 P/E (x) 17.1 32.5 33.8 23.2 RoE (%) 19.7 9.6 9.2 12.4 RoCE (%) 18.7 7.5 7.7 10.3 P/BV (x) 3.1 3.2 3.0 2.7 EV/Sales (x) 2.6 3.0 3.1 2.7 EV/EBITDA (x) 10.4 18.5 17.4 13.6 ; Note: CMP as of November 22, 2017 REDUCE CMP `2,361 Target Price `2,040 Investment Period 12 months Stock Info Sector Pharmaceutical Market Cap (` cr) Net Debt (` cr) 39,172 2,839 Beta 52 Week High / Low Avg. Daily Volume 0.4 3,247/1902 48,076 Face Value (`) BSE Sensex Nifty Reuters Code 5 33,562 10,342 REDY.BO Bloomberg Code DRRD@IN Shareholding Pattern (%) Promoters 26.8 MF / Banks / Indian Fls 17.2 FII / NRIs / OCBs 45.7 Indian Public / Others 10.4 Abs. (%) 3m 1yr 3yr Sensex 6.3 29.3 17.8 Dr Reddy 16.4 (24.3) (33.0) 3-year Daily Price Chart 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 Sarabjit Kour Nangra +91 2 39357600 Ext: 6806 sarabjit@angelbroking.com Please refer to important disclosures at the end of this report 1
Exhibit 1: 2QFY2018 performance (IFRS, consolidated) Y/E March (` cr) 2QFY2018 1QFY2018 % chg (qoq) 2QFY2017 % chg (yoy) 1HFY2018 1HFY2017 % chg Net sales 3,546 3,316 6.9 3,586 (1.1) 6,862 6,714 2.2 Other income/(loss) 11 42 (72.5) 64 53 246 - Total income 3,557 3,357 6.0 3,650 (2.5) 6,915 6,960 (0.6) Gross profit 2,170 1,990 9.1 2,278 (4.7) 4,160 5,091 (18.3) Gross margin (%) 61.2 60.0 63.5 60.6 75.8 SG&A expenses 1,103 1,176 (6.2) 1,177 (6.3) 2,280 2,303 (1.0) R&D expenses 418 508 (17.7) 521 (19.9) 925 1,917 (51.7) EBDITA 649 306 112.3 579 12.1 955 871 9.7 EBDITA (%) 18.3 9.2-16.2 13.9 13.0 - Depreciation 280 280 0.0 268.2 4.4 559.8 505.8 10.7 Interest 2 - - - - - PBT 381 67 465.0 375 1.5 448 611 (26.7) Tax 103 18 470.6 89 16.0 121 148 (18.4) Net Profit 278 49 463.0 287 (3.0) 328 462 (29.1) Share of profit/ (loss) in associates 9 10 8.0 19.2 - Reported net profit before exceptional 285 59 382.1 295 (3.3) 347 462 (25.0) Exceptional items (loss) /profit - - - - - Reported PAT 285 59 382.1 295 (3.3) 347 462 (25.0) Adj. Net Profit 285 59 382.1 295 (3.3) 347 462 (25.0) EPS (`) 17.2 3.6 17.8 20.9 27.9 Exhibit 2: Actual Vs Estimates (` cr) Actual Estimates Variation (%) Net sales 3,546 3,700 (4.2) Other income 11 64 (82.2) Operating profit 649 731 (11.1) Tax 103 191 (46.2) Adj. Net profit 285 594 (52.0) Revenue lower than expectations: The sales came in at `3,546cr (`3,700cr expected) v/s. `3,586cr, a yoy de-growth of 1.1%. Global Generics at `2,862cr, posted a yoy de-growth of 1.0%, while PSAI at `119cr, registered a yoy de-growth of 2.0%. The Global Generics, which forms 81% of overall sales, saw dip in its key growth market USA (`1,432cr), which posted a dip of 11.0% yoy, while Indian sales at `637cr posted a growth of 2.0%. The USA market continued to reel under the pricing pressures, while Indian sales were under the pressure on the back of GST. The global generic market had sales of `2,862cr (down 1.0% yoy). Europe posted a yoy growth of 36.0% to end the period at `242cr. Growth was driven by the new product launches and volume growth. Apart from this, the Emerging markets (`551cr, up 14% yoy) posted robust growth on the back of Russia (~`320cr), which posted a growth of 20% in the reported currency, while on constant currency terms the region posted a yoy growth of 13%. Its key growth market USA (`1,432cr), posted a dip of 11.0% yoy, while India (`637cr), posted a growth of 2.0%. November 24, 2017 2
(`cr) Dr. Reddy s Laboratories 2QFY2018 Result Update US posted a dip, primarily on account of higher price erosion, increased competition in the key products. This was partially offset by contribution from new launches. During the quarter, the company launched 4 new products. The PSAI segment posted sales of `565cr, up 22.0% yoy. The growth came in on the back of Europe (`194cr, a yoy growth of 4%) and ROW (`232cr, a yoy growth of 35.0%). However, growth was registered in Indian market (sales of `44cr, a yoy growth of 51%) and USA (`96cr, a yoy growth of 23%). As of September 30, 2017, cumulatively 103 generic filings are pending for approvals with the USFDA (100 ANDAs and 3 NDAs under 505(b)(2) route). Of these 100 ANDAs, 60 are Para IVs, out of which we believe 28 have First to File status. Exhibit 3: Trend in Global generics 3500 3000 2500 2000 1500 123 123 625 595 177 215 123 140 140 571 469 637 207 208 242 1000 500 0 1,613 1,659 1,535 1,496 1,432 2QFY2017 3QFY2017 4QFY2017 1QFY2018 2QFY2018 Others Russia & CIS India Europe North America In the PSAI segment (16% of sales), the US grew by 23% yoy, while, ROW, Europe and India grew by 35%, 4% & 51% yoy respectively during the quarter. Proprietary Products & Others at `119cr posted a yoy growth of 13.0%. November 24, 2017 3
(`cr) Dr. Reddy s Laboratories 2QFY2018 Result Update Exhibit 4: PSAI trend 700 600 500 400 300 200 100 0 198 190 194 232 58 41 40 156 44 210 183 139 254 194 91 114 126 53 80 96 2QFY2017 3QFY2017 4QFY2017 1QFY2018 2QFY2018 Others India Europe North America EBITDA margin expands yoy: On operating front, the EBDITA came in at 18.3% (19.7% expected) in 2QFY2018 v/s. 16.2% in 2QFY2017. R&D expenses were at 11.8% of sales in 2QFY2018 v/s. 14.5% of sales in 2QFY2017. Gross margins during the quarter were at 61.2% v/s. 63.5% in 2QFY2017. In spite of the same, 6.3% and 19.9% dip in the employee cost and R&D expenses respectively aided the margin expansion. Exhibit 5: EBITDA margin trend (%) 28.0 24.0 23.0 20.0 16.0 16.2 15.6 18.3 12.0 9.2 8.0 4.0 0.0 2QFY2017 3QFY2017 4QFY2017 1QFY2018 2QFY2018 Net profit lower than expected: Consequently, the PAT came in at `285cr (`594cr expected) in 2QFY2018 v/s. `295cr in 2QFY2017, a yoy de-growth of 3.3%. The net profit was lower than expected mainly on the back of the lower than expected OPM and other income. November 24, 2017 4
Exhibit 6: Adjusted net profit trend 500 470 400 300 295 312 285 200 100 59 0 2QFY2017 3QFY2017 4QFY2017 1QFY2018 2QFY2018 Concall takeaways Company guided for 2-3 new launches/quarter in USA. Duvvada USFDA re-inspection in 4QFY2018. DRL expects 15 ANDA launches in FY2018 (including 4-5 meaningful launches. Tax rate in FY2018 to stay at ~23-25% of PBT. 2 nd Copaxone DMF filing will happen in two months (apart from Srikakulam facility). R&D expense is expected to remain at higher levels due to strong product pipeline of complex generics, Biosimilars and differentiated products. R&D expenses during the quarter are expected to be ~`2000cr in FY2018. Investment arguments Robust pipeline for US going ahead: After attaining a critical mass (US$981mn in FY2017), DRL aims to scale up its business to the next orbit in the US market on the back of a strong product pipeline (103 ANDAs are pending approval, of which, 60 are Para IVs and 28 are FTFs). The Management has guided for a robust growth in the US over the medium term, driven by introduction of new products, some of which are also Para IV opportunities. Owing to the import alert on the three facilities of the company, we expect the ex-exclusivity US sales to be almost flat. Domestic to be back in focus: DRL reported a 9.0% yoy growth in FY2017. The management expects the company s performance to rebound and targets to achieve an above industry growth rate going ahead, driven by November 24, 2017 5
Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dr. Reddy s Laboratories 2QFY2018 Result Update (a) field force expansion and improvement in productivity; (b) new product launches (including biosimilars); and (c) focus on brand building. In 4QFY2015, DRL had acquired UCB s India portfolio and had completed the integration process of these brands in 1QFY2016. UCB s India business had registered ~`150cr sales in CY2014 and has a branded portfolio of 21 products focusing on Allergy, Respiratory, Dermatology and Pediatric space. The acquisition had been successfully integrated by 2QFY2016. Also, in FY2017, the domestic formulation business posted a lower growth, on account of NPPA pricing notifications and demonetization. In FY2018, the Indian domestic sales have taken a hit on the back of GST implementation, and hence, the year is expected to end with domestic formulation business growing at single digit or low double digit growth. Thus, we expect sales in India to post a CAGR of 8.9% over FY2017-19E. Outlook & Valuation: We expect net sales to grow at a CAGR of 5.1% to `15,548cr and adjusted EPS to post a CAGR of 18.5% over FY2017-19E to end FY2019 at `102. The stock has been severely beaten down post the import alert from the USFDA. However, considering the valuations, we recommend a Reduce rating on the stock. Exhibit 7: Key assumptions FY2018E FY2019E PSAI segment growth (%) 3.5 3.8 Generics segment growth (%) (4.3) 14.8 Operating margin (%) 17.7 20.2 Capex (` cr) 1200 1200 Exhibit 8: PE chart 5,500 4,500 3,500 2,500 1,500 500 (500) Price 20x 25x 30x 35x November 24, 2017 6
Exhibit 9: Recommendation summary Company Reco. CMP Tgt Price Upside FY2019E FY17-19E FY2019E (`) (`) (%) CAGR in PE EV/Sales EV/EBITDA RoCE RoE EPS (x) (x) (x) (%) (%) (%) Alembic Pharma Buy 511 600 17.3 21.4 2.9 13.0 5.7 20.6 18.4 Aurobindo Pharma Buy 699 823 17.8 13.6 2.5 9.9 14.2 25.3 22.7 Cadila Healthcare Reduce 443 411 (7.2) 21.6 4.1 17.6 18.9 16.5 22.2 Cipla Sell 619 462 (25.3) 25.5 3.2 16.2 39.3 10.9 13.1 Dr Reddy's Reduce 2,361 2,040 (13.6) 23.2 3.1 13.3 18.5 10.3 12.4 Dishman Pharma Under Review 301 - - 19.3 2.7 10.1 23.3 4.5 4.4 GSK Pharma Sell 2,496 2,000 (19.9) 53.9 6.9 39.3 19.3 25.8 23.5 Indoco Remedies Sell 280 136 (49.0) 23.5 2.1 14.9 16.2 10.1 14.5 Ipca labs Neutral 535 - - 21.2 1.9 13.5 24.7 12.4 11.0 Lupin Buy 828 1,091 31.8 16.7 2.4 9.3 (6.6) 13.7 13.7 Sanofi India* Neutral 4,434 - - 27.1 3.8 17.0 12.8 25.8 27.5 Sun Pharma Buy 535 615 15.0 24.0 3.7 16.3 (17.5) 11.3 14.0 ; Note: *December year ending Company Background Established in 1984, Dr. Reddy's Laboratories is an integrated global pharmaceutical company, through its three businesses - Pharmaceutical Services & Active Ingredients, Global Generics and Proprietary Products. The company s key therapeutic focus is on gastro-intestinal, cardiovascular, diabetology, oncology, pain management, anti-infective and paediatrics. The company s key markets include India, USA, Russia & CIS and Germany. November 24, 2017 7
Profit & loss statement (IFRS Consolidated) Y/E March FY2014 FY2015 FY2016 FY2017 FY2018E FY2019E Net sales 13,217 14,819 15,471 14,081 13,734 15,548 Other operating income 141.6 91.7 87.4 106.5 106.5 106.5 Total operating income 13,359 14,911 15,558 14,187 13,840 15,654 % chg 12.5 11.6 4.3-8.8-2.4 13.1 Total expenditure 10,096 11,535 11,669 11,811 11,308 12,411 Cost of revenues 4,977 5,531 5,315 5,219 5,402 5,725 SG&A expenses 3,878 4,259 4,570 4,637 3,983 4,509 R&D expenses 1,240 1,745 1,783 1,955 1,923 2,177 EBITDA 3,121 3,284 3,802 2,270 2,426 3,137 % chg 16.6 5.2 15.8-40.3 6.9 29.3 (% of Net Sales) 23.6 22.2 24.6 16.1 17.7 20.2 Depreciation & amortisation 659.8 747.4 927.4 1,026.6 1,052.8 1,115.5 EBIT 2,462 2,537 2,875 1,243 1,373 2,021 % chg 27.4 3.1 13.3-56.7 10.5 47.2 (% of Net Sales) 18.6 17.1 18.6 8.8 10.0 13.0 Interest & other charges - - - - - - Other Income 40.0 168.2 (270.8) 80.6 80.6 80.6 (% of PBT) 1.5 6.0 (10.0) 5.5 5.1 3.6 Share in profit of associates 17.4 19.5 22.9 34.9 34.9 34.9 Recurring PBT 2,661 2,816 2,714 1,465 1,595 2,243 % chg 19.0 5.9-3.6-46.0 8.9 40.6 Extraordinary expense/(inc.) - - 508.5 - - - PBT (reported) 2,660.6 2,816.3 2,714.0 1,465.3 1,595.4 2,243.2 Tax 509.4 598.4 712.7 261.4 436.9 552.1 (% of PBT) 19.1 21.2 26.3 17.8 27.4 24.6 PAT (reported) 2,151.2 2,217.9 2,001.3 1,203.9 1,158.5 1,691.1 Add: Share of earnings of asso. - - - - - - Less: Minority interest (MI) - - - - - - Exceptional items - - - - - - PAT after MI (reported) 2,151.2 2,217.9 2,001.3 1,203.9 1,158.5 1,691.1 ADJ. PAT 2,151.2 2,217.9 2,357.0 1,203.9 1,158.5 1,691.1 % chg 22.9 3.1 6.3 (48.9) (3.8) 46.0 (% of Net Sales) 16.3 15.0 12.9 8.5 8.4 10.9 Basic EPS (`) 126.7 130.2 138.2 72.6 69.9 102.0 Fully Diluted EPS (`) 126.7 130.2 138.2 72.6 69.9 102.0 % chg 22.9 2.7 6.1 (47.4) (3.8) 46.0 November 24, 2017 8
Balance sheet (IFRS Consolidated) Y/E March (` cr) FY2014 FY2015 FY2016 FY2017 FY2018E FY2019E SOURCES OF FUNDS Equity share capital 84.9 85.2 85.3 82.9 82.9 82.9 Preference Capital - - - - - - Reserves & surplus 8,995 11,045 12,748 12,179 12,938 14,230 Shareholders funds 9,080 11,130 12,834 12,262 13,021 14,313 Minority Interest Total loans 4,474.2 3,954.3 3,661.9 5,335.1 6,000.0 6,800.0 Deferred tax liability (192.9) (401.3) (423.0) (516.4) (516.4) (516.4) Total liabilities 13,361 14,683 16,073 17,081 18,505 20,597 APPLICATION OF FUNDS Net fixed assets 3,945 4,314 5,396 5,142 6,342 7,542 Goodwill /other intangibles 1,470 1,643 1,969 4,618 4,618 4,618 Capital Work-in-Progress 495.2 495.2 495.2 495.2 495.2 495.2 Investments 2,589 3,811 3,833 2,110 2,110 2,110 Current Assets 7,866 8,558 8,465 8,257 8,216 9,605 Cash 845 539 492 387 791 1,206 Loans & Advances 793.0 889.1 928.2 844.9 824.0 932.9 Other 6,228 7,129 7,045 7,025 6,600 7,465 Current liabilities 3,006 4,214 4,193 4,057 3,792 4,289 Net Current Assets 4,860 4,344 4,273 4,199 4,423 5,315 Other Assets 76 106 517 517 517 Total Assets 13,361 14,683 16,073 17,081 18,505 20,597 November 24, 2017 9
Cash flow statement (IFRS Consolidated) Y/E March (` cr) FY2014 FY2015 FY2016 FY2017 FY2018E FY2019E Profit before tax 2,661 2,816 2,714 1,465 1,595 2,243 Depreciation 660 747 927 1,027 1,053 1,116 (Inc)/Dec in Working Capital (906) 211 24 (32) 181 (477) Less: Other income 40 168 (271) 81 81 81 Direct taxes paid 509 598 713 261 437 552 Cash Flow from Operations 1,865 3,008 3,224 2,118 2,311 2,249 (Inc.)/Dec.in Fixed Assets (164) (369) (1,082) 254 (1,200) (1,200) (Inc.)/Dec. in Investments 824 1,222 22 (1,723) - - Other income 40 168 (271) 81 81 81 Cash Flow from Investing 701 1,021 (1,331) (1,389) (1,119) (1,119) Issue of Equity - 0 0 (2) - - Inc./(Dec.) in loans 798 (520) (292) 1,673 665 800 Dividend Paid (Incl. Tax) 358 399 399 399 399 399 Others (3,390) (4,214) (2,047) (2,904) (1,851) (1,914) Cash Flow from Financing (2,234) (4,335) (1,940) (834) (787) (715) Inc./(Dec.) in Cash 331 (306) (47) (106) 405 415 Opening Cash balances 514 845 539 492 387 791 Closing Cash balances 845 539 492 387 791 1,206 November 24, 2017 10
Key ratios Y/E March FY2014 FY2015 FY2016 FY2017 FY2018E FY2019E Valuation Ratio (x) P/E (on FDEPS) 18.6 18.1 17.1 32.5 33.8 23.2 P/CEPS 14.3 13.6 13.8 17.6 17.7 13.9 P/BV 4.4 3.6 3.1 3.2 3.0 2.7 Dividend yield (%) 0.6 0.6 0.6 0.6 0.6 0.6 EV/Sales 3.1 2.7 2.6 3.0 3.1 2.7 EV/EBITDA 13.2 12.1 10.4 18.5 17.4 13.6 EV / Total Assets 3.1 2.7 2.5 2.5 2.3 2.1 Per Share Data (`) EPS (Basic) 126.7 130.2 138.2 72.6 69.9 102.0 EPS (fully diluted) 126.7 130.2 138.2 72.6 69.9 102.0 Cash EPS 165.5 174.0 171.7 134.5 133.4 169.3 DPS 15.0 15.0 15.0 15.0 15.0 15.0 Book Value 534.7 653.3 752.3 739.6 785.4 863.3 Dupont Analysis EBIT margin 18.6 17.1 18.6 8.8 10.0 13.0 Tax retention ratio 80.9 78.8 73.7 82.2 72.6 75.4 Asset turnover (x) 1.2 1.1 1.0 0.9 0.8 0.8 ROIC (Post-tax) 17.4 15.1 14.3 6.4 5.8 8.3 Cost of Debt (Post Tax) 0.0 0.0 0.0 0.0 0.0 0.0 Leverage (x) 0.4 0.4 0.3 0.3 0.4 0.4 Operating ROE 24.7 20.4 18.3 8.5 8.2 11.5 Returns (%) ROCE (Pre-tax) 20.2 18.1 18.7 7.5 7.7 10.3 Angel ROIC (Pre-tax) 25.6 22.5 22.9 10.1 11.4 15.0 ROE 26.3 21.9 19.7 9.6 9.2 12.4 Turnover ratios (x) Asset Turnover (Gross Block) 3.5 3.6 3.2 2.7 2.4 2.3 Inventory / Sales (days) 62 61 60 62 63 65 Receivables (days) 89 90 96 89 91 94 Payables (days) 40 43 59 40 39 40 WC cycle (ex-cash) (days) 97 96 89 98 98 90 Solvency ratios (x) Net debt to equity 0.4 0.3 0.2 0.4 0.4 0.4 Net debt to EBITDA 1.2 1.0 0.8 2.2 2.1 1.8 Interest Coverage (EBIT / Int.) - - - - - 1.0 November 24, 2017 11
Research Team Tel: 022-39357800 E-mail: research@angelbroking.com Website: www.angelbroking.com DISCLAIMER Angel Broking Private Limited (hereinafter referred to as Angel ) is a registered Member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL and Portfolio Manager with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Private Limited is a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public offering of securities of the company covered by Analyst during the past twelve months. This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the contrary view, if any. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Pvt. Limited endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may Disclosure of Interest Statement Dr. Reddy s Laboratories 1. Financial interest of research analyst or Angel or his Associate or his relative No 2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No 3. Served as an officer, director or employee of the company covered under Research No 4. Broking relationship with company covered under Research No Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%) over 12 months investment period): Reduce (-5% to -15%) Sell (< -15) November 24, 2017 12